Expert Perspective by Grahall’s OmniMedia Editorial Board
Everybody loves a great quote and so we couldn’t resist when, according to an article and video clip offered through the New York Times November 19, 2009 Dealbook (the article aptly titled Morgan Stanley’s Mack: ‘We Cannot Control Ourselves’), Morgan Stanley’s John Mack said “‘Regulators have to be much more involved… We cannot control ourselves.’” The article continues: “Wall Street is facing more scrutiny from Washington after the financial crisis last fall. For John J. Mack of Morgan Stanley, that’s just fine.”The article goes on to quote Mr. Mack in his praise of the dozen or so regulators who now patrol Morgan Stanley’s offices in the wake of the firm becoming a bank holding company. “I love it,” he said, adding that it forced him and his firm to watch the level of risk they were taking on.
Hmmmm, he loves it? We kind of hope NOT since the definition of love according to the Merriam Webster on line dictionary includes “strong affection for another arising out of kinship or personal ties, an attraction based on sexual desire, or an affection based on admiration, benevolence, or common interests.” Then again, maybe he means “love” as in “a score of zero (as in tennis)”. In any event it is clear that “love” in this content is an overused term.
Listening to the video tape (available on Huffington Post Mack says: “We have 15 to 20 Fed regulators in our building 24 hours a day…”
Hyperbole, perhaps? We would be delighted to see regulators work even 8 hours a day.
On a more serious note, we expect that Mr. Mack, who has taken a beating in the markets and, in terms of talent pilfering from Goldman and JP Morgan, might be advocating for regulation to level the playing field and create a dampening effect or at least a distraction to these powerhouse competitors.
But has Mr. Mack really thought this out? Time and again we are reminded that the White House is surrounded by Goldman alumni and advocates. Whether it be the Chief of Staff to Treasury Secretary Geithner (or Geithner himself for that matter), or the Deputy Director of the National Economic Council, or the many former Goldman protégés of Robert Rubin embedded in various positions of power, Goldman’s influence runs deep.
It seems there couldn’t be a better time for regulations to be written or regulators to be unleashed that would benefit Goldman Sachs. In fact, it might be in Goldman’s best interest to have these regulations written now, before someone realizes our government might be of and by the people but for Goldman Sachs. Perhaps Mack didn’t think of that when he expressed his delight at having regulators patrolling his hallways. Or maybe this is his way of sending a message that he wants one of those high paying GS jobs?
Regardless of the above speculation, the truth remains that our President has a great challenge ahead of him. America just a few years ago had great “brand” image. Our greatest export might have been the fact that we have rules, regulations – and a level playing field that gave investors a sense of security and confidence. Today that image is badly tarnished and we are at risk of losing one of our best products: investor confidence. We need to fix that.
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